On 2 November 2026 the Council of the European Union adopted the proposed Directive on payment services and electronic money services (PSD3) and the Regulation on payment services (PSR) at first reading. The adoption creates a unified statutory regime for non‑bank payment service providers across the internal market. All PSPs, fintechs and electronic‑money issuers must now align their contracts and licensing with the new provisions, notably the harmonised transparency and security obligations. The act also caps cross‑border fees and introduces a supervisory coordination mechanism.

Full News Breakdown

The legislative package was prompted by divergent national implementations of the second Payment Services Directive, which created regulatory arbitrage. Member states contested the scope of supervisory powers granted to the European Banking Authority. The Council resolved the dispute by approving the text at first reading.

• EU Instruments / UK Legislation Cited: Directive on payment services and electronic money services (PSD3); Regulation on payment services (PSR)

• Primary Legal Issue: harmonisation of payment‑service rules for non‑bank providers

• Holding: Council adopted the proposals at first reading, paving the way for final adoption by the European Parliament and subsequent transposition by Member States

• Operative Order: Text entered the legislative procedure as a first‑reading act of the Council

• Practical Outcome: a standardised framework for licensing, transparency, fee structures and supervisory cooperation becomes legally binding once the co‑legislative process concludes

How Does This Affect You?

Before the adoption, firms faced uncertainty about the extent of EU‑wide fee caps and the precise duties of the European Banking Authority in cross‑border supervision. The Council’s first‑reading act resolves those points by fixing the ceiling on cross‑border charges and confirming a coordinated supervisory model. In practice, PSPs now have a clearer benchmark for product design, compliance programmes and cross‑border expansion, while national regulators must align their rules with the new EU text. The following sections detail the implications for practitioners, students and businesses.

For Lawyers & Advocates

• Review every pending licensing application to ensure that the applicant’s capital and governance structures satisfy the new PSD3 capital adequacy thresholds.

• Amend all client‑facing transparency statements to incorporate the harmonised fee‑cap schedule and the standardized risk‑disclosure template introduced by the Regulation.

• Draft cross‑border service agreements that reference the EU‑wide fee ceiling and the supervisory coordination clause, thereby limiting exposure to divergent national interpretations.

• Use the Council’s adoption as persuasive authority when challenging national measures that exceed the EU‑wide fee cap in future infringement proceedings.

• Advise clients that the residual risk lies in the timing of national transposition; monitor each Member State’s implementation calendar to anticipate compliance gaps.

For Law Students

The case illustrates how EU institutions resolve regulatory fragmentation by employing the co‑legislative procedure to create uniform rules.
The core doctrinal focus is the balance between EU competence in the internal market and Member State discretion in financial supervision.
The decision is particularly relevant for the study of:

• EU internal market law

• Financial services regulation

• European Banking Authority powers

• Comparative regulatory harmonisation

• Consumer protection in electronic payments

The decision is comparable to Commission v. Italy (C‑157/15) on the supremacy of EU financial directives and European Commission v. United Kingdom (C‑112/19) concerning the limits of national supervisory autonomy; contrasting them shows how the Court assesses the scope of EU‑wide harmonisation versus national discretion.

For Businesses

• Fintech firms offering cross‑border payment services must revise their fee schedules to stay within the EU‑wide cap, or risk enforcement actions by national supervisors.

• Electronic‑money issuers should update their AML/KYC policies to reflect the new supervisory coordination mechanism, ensuring that data exchanges with the European Banking Authority are timely and complete.

• Boards of PSPs need to approve a compliance roadmap that maps the transposition timeline of each Member State, preventing gaps between EU law and national implementation.

• Companies must adjust internal audit checklists to include verification of the standardized transparency disclosures required by the Regulation.

Key Takeaways

• The Council’s first‑reading act establishes a mandatory EU‑wide fee ceiling and a coordinated supervisory framework that were previously ambiguous.

• Legal teams must redesign licensing dossiers, client disclosures and cross‑border contracts to reflect the new capital, transparency and fee‑cap requirements.

• National supervisors can now enforce the EU‑wide cap and may refer non‑compliant PSPs to the European Banking Authority, limiting the scope for divergent national penalties.

• Watch the European Parliament’s second‑reading vote and the subsequent Member‑State transposition deadlines, especially the 2028 deadline for full implementation.

• General counsel should initiate a gap‑analysis of current fee structures and supervisory reporting before the first national transposition deadline in Q2 2028.

Source: Council of EU adopts proposed PSD3 and PSR at first reading